Taiwan Seeks Compensation as Vietnam Factories Restart

May 17 (Bloomberg) -- Taiwan’s foreign minister urged
Vietnam to compensate companies hurt by this week’s violent
anti-China riots even as waning protests prompted several
manufacturers to restart production in the country.

“We’re asking that the Vietnamese government protect the
personal safety and property of Taiwanese people, punish
perpetrators and compensate losses,” David Lin, Taiwan’s
minister of foreign affairs, said at a briefing in Taipei
yesterday. Vietnam’s representative to Taiwan, Bui Trong Van,
said at the same conference the country would “handle
properly” the issue of compensation.

Attacks on foreign-owned factories following China’s
placement of an oil rig in disputed waters off the Vietnamese
coast left two people dead and at least 129 injured, halting
production lines and causing Chinese workers to flee the
country. The resumption of operations by companies including
Formosa Chemicals & Fibre Corp. and China Steel Corp. have eased
some fears that the riots would crimp global supply chains and
hurt the Southeast Asian nation’s economic growth.

“Shares of Taiwan companies affected by the rioting may
rebound as production resumes, but they may be under pressure by
end of June as investors watch the impact on second-quarter
earnings,” said Simon Liu, a Taipei-based vice president of
Yuanta Securities Investment Trust Co., which manages about
NT$300 billion ($9.9 billion) of assets, including shares of
Formosa Chemicals & Fibre and China Steel. “It looks like the
conflict between China and Vietnam won’t resolve any time soon.
You don’t know if frictions will pop up now and then.”

Order Restored

The two companies are among several Taiwanese manufacturers
that restarted factories even as some Vietnamese activists said
they planned to organize more protests tomorrow. Rallies could
also be held May 19, which is the birth anniversary of the
nation’s founder Ho Chi Minh.

Formosa Chemicals & Fibre President F.Y. Hong said in a
telephone interview that the company had restarted textile
plants that were shut May 14 after being invaded by protesters.
Hong said he expected Vietnamese operations for the Taipei,
Taiwan-based company would return to normal by month-end.

Yue Yuen Industrial Holdings Ltd., a supplier to Nike Inc.
and Adidas AG, said it had restarted production in its Vietnam
factories, which account for about a third of its total output.
Cheng Shin Rubber Industry Co., Eclat Textile Co., footwear
manufacturer Feng Tay Enterprise Co. and garment maker Makalot
Industrial Co. also said they had resumed operations.

‘Back to Normal’

“Everything is back to normal,” said Jerry Shum, a Hong
Kong-based spokesman for Yue Yuen. “We’ve been given strong
indications from the Vietnamese government that they will see
that order is restored in due course.”

Vietnam’s dong had the biggest weekly decline since June
amid the escalating tensions with China. The currency fell 0.31
percent to 21,165 per dollar yesterday, the most since the five
days to June 28, according to prices from banks compiled by
Bloomberg.

Even as some firms resumed operations, parts maker Haitian
International Holdings Ltd. said it had halted manufacture in
its Vietnam factory from May 14. Hon Hai Precision Industry Co.,
the iPhone assembler which is the biggest unit of Foxconn
Technology Group, said it would suspend operations for three
days “out of concern for workers’ safety.”

Protection

Vietnam has “urgently” ordered industrial parks, economic
zones and provincial governments to take action to protect
investors and the property of foreign-invested companies,
Planning and Investment Minister Bui Quang Vinh said in a
statement yesterday, adding that losses caused by violent
protesters is “unfortunate.”

The minister blamed the violence on a few “extremists”
and said about 300 participants would be prosecuted. The
government would take “drastic actions to quickly stabilize the
situation, and protect foreign companies’ property and help
businesses resume normal operations in Vietnam,” he said.

China “strongly urges” Vietnam to take action to deal
with the aftermath of the riots, Assistant Foreign
Minister Liu Jianchao told Vietnamese officials after talks in
Hanoi yesterday, China’s Ministry of Foreign Affairs said in
statement posted on its website today.

Vietnam’s Deputy Foreign Minister Pham Quang Vinh expressed
regret for the loss of lives and property of Chinese nationals
and said the country will continue to make “all-out efforts”
to protect the safety of Chinese nationals and organizations and
stop all violence, according to the statement.

“What we want to see now is how the government will manage
to control the damage,” Le Dang Doanh, an economist and former
government adviser, said in a phone interview in Hanoi. “The
damages here include losses to foreign companies, which had to
shut down, and the country’s loss in terms of its reputation.”